New rules for offshore drilling under consideration in Congress could create major competitive advantages for offshore contract drillers that have heavily invested in modern drilling fleets in recent years. According to The Wall Street Journal, legislation designed to prevent future oil spills set minimum standards for blowout preventers (BOP) that could render older drilling rigs obsolete or, at a minimum, require expensive retrofitting. Read this article for more information.
Noble Corporation recently announced second quarter 2010 earnings of $218 million, or $0.85 per share. The results were negatively impacted by a combination of lower utilization for the overall fleet and sharply lower average dayrates. As a result, contract drilling revenues dropped to $687.5 million for the second quarter compared to $808.6 million for the first quarter. Second quarter 2009 contract drilling revenues were $868.2 million. In this article, we take a closer look at Noble’s results.
Earlier this week, Noble Corporation announced that it has entered into an agreement to acquire Frontier Drilling in a cash transaction valued at $2.16 billion. Frontier is a privately held independent drilling company with a fleet of three dynamically positioned drillships, two conventionally moored drillships, one deepwater semisubmersible drilling rig, and one dynamically positioned floating production, storage, and offloading (FPSO) vessel. In addition, Noble has entered into an agreement with Shell that favorably impacts backlog. Read this article for more details.
As we discussed in our recent article on National Oilwell Varco, the financial markets have been reacting to the Deepwater Horizon disaster by punishing the stock prices of nearly every company associated with oil and gas exploration in the Gulf of Mexico. In certain cases, the market reaction may be justified by deteriorating fundamentals and in other cases, stocks may be under pressure based on confusion, uncertainty, or merely “guilt by association”. The current situation in the Gulf of Mexico is a national disaster but is it reasonable to believe that this rich domestic source of oil and gas will not be tapped in the future? The job of the value investor is to look at these types of situations as opportunities and to identify cases where Mr. Market may have overreacted. In this article, we take a look at Noble Corporation.